“According to the Treasury Inflation-Protected bond market, …”

One kind of commentary I keep running across, even from people 26 sigmas smarter than me, goes like this: “Inflation fears are overblown. According to the Treasury Inflation-Protected bonds (TIPs) market, inflation is deteriorating rapidly because …”
Let’s go over the reasons why this kind of analysis is false and misleading:
1) It’s not very true according [...]

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More Sivs freezing over

Florida isn’t the only state being left as a bagholder for the SIV mess. After a run started on a Florida SIV (causing FL to freeze withdrawals), Montana is also discovering that above-market yields are no free lunch.

SAN FRANCISCO (MarketWatch) — Florida’s investment troubles have triggered withdrawals from other states’ funds as the subprime mortgage [...]

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Russia: “This conversation is over”

When Mideast analysts who know what they’re talking about (i.e. Stratfor) have previously gotten all giddy about prospects for peace in the Mideast, I have always had this kneejerk roll-eyes reaction. Not that their relatively pricey news isn’t worth it (far, far from it). But from my vastly less informed viewpoint, there are simply too [...]

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Anatole Kaletsky to Ben Bernanke: You Suck

Good stuff.

Is the financial world about to collapse? You’d think so if you listened to the financiers
Anatole Kaletsky
What on earth is happening in the financial markets? Last week Northern Rock was going bust, stock markets were collapsing and the world banking system seemed to be going down the tubes. Now everything has [...]

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Ted spread update

3-month Libor: 5.12%
3-month Treasury: 2.86%
3-month Ted spread: 226bps
Ted spread precedents: Black Monday 1987 (~255bps), and before that, the 1979-83 bear market.
Suckers’ rally.

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Some wisdom

Fed Up
by Alvaro Vargas Llosa
We’ve been told not to imagine a world without the Federal Reserve. Maybe we should.
Post Date Wednesday, November 28, 2007
WASHINGTON–Recently, The Washington Post carried a front-page story about a federal raid on the headquarters of the National Organization for the Repeal of the Federal Reserve Act and Internal Revenue Code (Norfed). [...]

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Fed pumps, dollar … goes up?

Apparently, once again there are grounds for hope for a “more lasting accommodation” in the Mideast, judging by the latest kabuki signals between Pres. Ahmonajihad and Uncle Sam.
And, oh, right: Don Kohn said that we needed some more of that pragmatic flexibility on interest rates.
And there was much rejoicing.
My hobbyhorse du jour, the difference between [...]

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Bill Clinton: Reliving History

I don’t like to comment on partisan politics much. I used to. As I say in my ‘About’ page, once I figured out that Republicans and Democrats were more or less equally hypocritical, I hit the road, and have essentially been looking for a different kind of institution and a different channel for my life [...]

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What’s going on?

So I understand the idea that the SWF put has once again displaced everything else at the front of the trader’s/speculator’s mind, and that it might justify some long-forgotten bullishness.
But meanwhile, the Treasury-London interbank offer rate, also approximated as the Treasury-LIBOR, Treasury-eurodollar, or ‘Ted’ spread, is now the widest it has been in at least [...]

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Another failing corporation massively increases its annual bonus

I’m talking, of course, about the Vatican.
When he was once asked how many people worked in the Vatican, Pope John XXIII (1958-63) is said to have replied: “About half, I think.”
Pope Benedict XVI, perhaps aware of this gibe, has decided to offer the first financial rewards and corporate-style incentives to Vatican employees who are [...]

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Zimbabweimar inflation: approximately 1/0 %

Seriously, how badly can you screw over your country before getting assassinated? Mao obviously takes the crown for gross utility destroyed, but his population gave him an unfair advantage over the competition. Bernanke, Rubin and Paulson are probably obliterating the most gross capital since Nixon-Burns, but they have so many generations’ accumulated toil to destroy [...]

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Muftigroup, and the SWF put

It’s the early 1990’s all over again: Citigroup has sold a fat chunk of its soul to them Ay-rabs again, who this time are calling themselves the Abu Dhabi Investment Authority.
I guess too many tongues started wagging when Citigroup went from -6.5% to -3% in one instant at today’s close, presumably completing ADIA’s purchase of [...]

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Another Fed injection: how very generous

 
Fed moves to head off funding crisis
By Paul J Davies and Michael Mackenzie in London and Ralph Atkins in Frankfurt
Published: November 26 2007 16:28 | Last updated: November 26 2007 19:06
The US Federal Reserve aggressively ramped up its efforts to head off a new year’s funding crisis on Monday by giving an unlimited promise to [...]

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So much for the Super Sieve being a “private-sector initiative”

In case anybody thought the Fed was some kind of disinterested party in curing the banks’ SIV-positive balance sheets… do I have a shocker for you!:
Nov. 26 (Bloomberg) — Bank of America Corp., the nation’s second-largest bank, will lead efforts by Citigroup Inc. and JPMorgan Chase & Co. to [...]

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Academic peeves revisited: Larry Summers edition

Another kind of academic shilling that really grinds my gears is when an academic/policy luminatus, who has lots of celebrity and political untouchability within academe, demands a stronger dose of the activism he originally implemented, which itself sowed the seeds of the current crisis. It is politically impossible for your typical risk-averse, but still quite [...]

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Academic malpractice

Academic policy advocacy, in the words of my nemesis Peter Griffin, really grinds my gears.. in many ways; to the point that I have conniption fits a healthy majority of the time that I read academic articles.
One way is when a well-known, or at least well-credentialed academic brandishes his credentials, mixed in with a lot [...]

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Saudi scheming in Pakistan

Pervez Musharraf, the most adroitly pro-American, pro-market, anti-anti-India, and (finally) anti-jihadist ruler of Pakistan in the country’s history, was facing the crisis of his life before Nawaz Sharif returned to Pakistan.
Sharif was the Prime Minister of Pakistan whom Musharraf overthrew in 1999, who has now returned on a private jet provided by the Saudi royal [...]

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More panic in Euroland

American and European financial media seem to inhabit two different universes. Compared to the conservative European financial press, American financial media other than Bloomberg are hypnotized by cultish optimism. For example, yesterday, the NYT’s Floyd Norris wondered aloud if the US economy would just “shrug off” the housing bubble.
Evans-Pritchard’s article today is a bit on [...]

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The ECB freaks out

As we saw recently, the Europeans decided they didn’t like the way the bond markets were trading, so they shut down the covered bonds market until further notice.
Today, Jean-Claude Trichet announced that for the same time frame — “next week, and as long thereafter as necessary” — the ECB would be providing more of that [...]

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In the Mideast, a domino falls.

Via Stratfor, Drudge, and everybody else:

Lebanon: State of Emergency
November 23, 2007 18 39 GMT
Lebanese President Emile Lahoud declared a state of emergency Nov. 23, ordering the army to take control.
As we saw earlier, the Hezbollah/Syria axis has laid meticulous plans for a hostile takeover of Lebanon. Emile Lahoud, the pro-Syrian president (facing a bare [...]

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